Apparently, a summit as formal as APEC can now be a source
of amusement for the rest of us who can hardly understand economic jargon.

Hosted by Beijing, the 3-day event was attended by the
leaders of top countries such as Japan, US, Russia, Singapore, South Korea and
Australia. Out of this year's summit came a number of jokes poking fun at world
leaders no less. There's the Shawlgate (Vladimir Putin's chivalrous act of
draping a shawl over the shoulder of Xi Jinping's wife), the gum-chewing of
Barack Obama and of course those 'Star Trek' uniforms (we've heard they're
actually traditional Chinese tunics but the rest of the world decided they are
all cosplaying Trekkies ).

On a more serious note, China backed a free-trade deal for the Asia-Pacific region
-- something that is anticipated to put
her at the forefront of regional commerce.

The regional deal named the Free Trade Area of the Asia
Pacific (FTAAP) was originally from an APEC business panel, but despite prior
comments from various leaders that this proposal could be a distraction, China
still put it as a main agenda of the meeting -- marking the first time it has led such an initiative.

The delegates in turn issued an official statement agreeing
to launch a committee that will conduct a
2-year study of the proposal.

China's Xi Jinping said, "This is a historic step in
the direction of an Asia-Pacific free trade area." He added that APEC
nations must actively promote this pact and "turn the vision into reality
as soon as possible".

Hendren Global Group Top
Facts sees this as counter move to the Trans-Pacific Partnership (TPP), US'
own trade agreement with 12 nations, excluding China. The US is advocating the
TPP as means to reroute commerce towards their way, while trying to put
pressure to Beijing to conform to their trade practices. Obama himself believes
that there's a momentum building in favor of TPP's completion.

It seems like an instrument to put China aside and weaken
its economic condition, noted Hendren Global Group Top Facts. China's move to
promote its own trade deal can perhaps lead to a new and stronger status in the
region. It may say its motives does not
include hurting the US but as the biggest trading partner a country can have in
the region, it will inevitably chip away US influence.

Trade officials from the US are downplaying its supposed
adverse effect to their country, saying that the two deals are not really
competitors.

Obama does not seem to be worried as he iterates that the US "welcomes the rise
of a prosperous, peaceful and stable China".

Sunday, 2 November 2014

According
to the news from The Economist, entitled “Economic Convergence: Economic
Headwinds Return”, “Ten years ago, developing economies were catching up with
developed ones remarkably quickly. It was an aberration.”

Reviewing
the decade-and-a-half journey of China from a lagging economy to one that has
surpassed many nations in Europe in terms of average income generation, the
article describes the dire realities that beset the once
sleeping-giant-turned-global-power. Using Hong Kong as the standard by which to
measure economic
growth, average incomes dip to 50% in Shenzhen, to 25% in Guandong and to a
mere 10% in Yunnan. That is an overall average of less than 30% that of Hong
Kong, which is essentially a small dot of an island compared to the gigantic
mainland China teeming with so many millions of people.

The
average annual rate of growth from 2000 to 2009 for developing nations was
7.6%, 4.5% higher than that seen in developed
rich nations. That unprecedented rate practically narrowed down the gap
between the developed and developing countries.

The
once deprived populations of the world, a big majority of whom are found in
Asia and living on less than the global poverty level of $1.25 daily income,
surged on from a share of 30% of the world population in 2000 to less than 10%
as of April 2014, according to the Center for Global Development
based on new date from the World Bank. At that pace, it is estimated that in
only 30 years, the average income per person would converge with that in
America. This is certainly cause for great hope for many people on a global
scale.

Sad to
say, those hopes are now slipping away. An evaluation of data on GDP per person
based on new computations of cost of living released in April by the World
Bank’s International Comparison Programme (ICP) seems to show that convergence
has slowed down drastically.

Since
2008, growth rates across the emerging nations have slowed down and matched
those in developed economies. When the new ICP figures are applied, the average
GDP per capita in the emerging world, measured on a purchasing-power-parity
(PPP) basis, grew just 2.6 percentage points faster than American GDP in 2013.
If China is removed from the estimates, the difference is only 1.1%. At that
rate, convergence with rich-economy incomes will occur in a hundred years or
more, longer than a generation. If China is included, emerging economies could
expect to reach rich-world income levels, on average, in a little over
half-a-century.

Japan,
which achieved industrialization in the first part of the 20th century, grew to
be the world’s second largest economy, next to USA. South Korea, Taiwan and
several city-states like Singapore and Hong Kong also grew and developed into
prosperous nations. The rush to achieve levels of growth close to those of
developing nations became an addiction to these nations and others who needed
to catch up as well. The price paid in terms of investments on human capital
led to social and political problems as some nations had to export their
workers to the industrialized or more prosperous nations. Ironically, the
income generated by those workers help to sustain those nations during the
crises that transpired.

In
trying to explain the growth disparity, economists pointed to institutions
being the key while others focused on “geography and climate”. Moreover, they
said that “remoteness from economic centers and hot, disease-prone conditions
could retard development,” which is the case in many of the Southeast Asian
countries where the issues of rebellion and ethnic differences provide
obstacles to development of the depressed country-sides.